The Impact of Bank Regulations and Institutions on Efficiency in Selected MENA Banks

Houda Sassi

Abstract

This paper suggests analyzing the relationship between the regulatory and institutional indicators and the technical efficiency of commercial banks in 5 MENA countries during the period of 2003-2011. Firstly, we calculate the scores of efficiency with non parametric approach (DEA: Data Envelopment Analysis). Secondly, we use the Tobit regression to study the impact of the specific characteristics of banks, the indicators of governance, regulation and economic freedom indexes. The empirical results indicate evidence that a strong restriction can result in higher bank inefficiency. However, banks operating in conditions of economic freedom and governance are more likely to benefit from higher operating efficiency levels.

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